Here's something most handyman business owners learn the hard way: one accident can wipe out months of profit. Drop a ladder through a client's window? That's $2,000. Someone trips over your toolbox and breaks their wrist? You're looking at $15,000 in medical bills. And if you've got employees working without proper coverage, you could face state fines on top of injury costs.
The good news? Handyman insurance is surprisingly affordable, and getting the right coverage is more straightforward than you might think. Whether you're a solo operator working weekends or running a crew of five, this guide walks you through exactly what you need, what it costs, and how to avoid overpaying for coverage you don't actually need.
The Coverage You Actually Need
Let's cut through the insurance jargon. As a handyman, you're walking into people's homes with tools, climbing ladders, and working around expensive property. Three types of coverage form your safety net.
General liability insurance is your first line of defense. This covers you when you accidentally damage a client's property or someone gets injured on the job. Drilling into a wall and hit a water pipe? Your general liability policy handles the repair costs and any damaged belongings. A homeowner slips on the tarp you laid down? Medical bills are covered. In 2025, handymen pay an average of $67 per month for general liability coverage with $1 million per occurrence and $2 million aggregate limits. That's less than you'd pay for a single emergency claim out of pocket.
Commercial property insurance protects your tools, equipment, and business property. If your van gets broken into and someone steals $3,000 worth of power tools, this coverage reimburses you. It also covers your tools while they're at a job site, not just when they're locked in your shop. For handymen who haul equipment to different locations daily, tools and equipment insurance costs about $34 per month on average.
Workers' compensation insurance becomes essential once you hire employees. Most states require it once you have anywhere from one to five employees, depending on where you operate. This coverage pays for medical expenses and lost wages if an employee gets hurt on the job. Skip this coverage and you're facing potential state fines plus personal liability for any workplace injuries. In states like Delaware, you need it with just one employee. Texas is the rare exception where it's optional for most private employers, though many clients still require it.
Business Owner's Policy: The Smart Money Move
Here's where most handyman businesses save money: instead of buying general liability and commercial property insurance separately, you bundle them into a Business Owner's Policy. A BOP packages both coverages together and typically costs less than purchasing them individually. Contractors pay an average of $98 per month for a BOP in 2025, which is often cheaper than the combined cost of standalone policies.
A BOP also includes business interruption coverage that most handymen overlook. If a fire damages your workshop and you can't work for two months, business interruption insurance replaces your lost income while you recover. It covers ongoing expenses like truck payments and insurance premiums even when you're not earning revenue.
Small handyman operations working primarily with residential customers usually qualify for a BOP. If you're a solo operator or run a small crew without high-risk services, this bundled approach offers the best value. One important note: a BOP doesn't include workers' compensation or commercial auto insurance, so you'll need to add those separately if you have employees or use vehicles for business.
Additional Coverage to Consider
Professional liability insurance protects you from claims that general liability doesn't touch. Say you install a ceiling fan and three months later it falls because you missed a structural issue in the mounting. The homeowner claims your workmanship was faulty and wants you to pay for repairs plus the damaged furniture below. Professional liability covers errors, omissions, and allegations of negligent work. While it's optional, it's worth considering if you do any specialized installations or repairs where your expertise is central to the job.
Commercial auto insurance is required in most states if you use a vehicle for business. Your personal auto policy won't cover accidents that happen while you're driving to job sites or hauling materials. If you're using your truck to transport tools and meet clients, you need commercial coverage. This protects against medical expenses and property damage from business-related accidents.
Cyber liability insurance is increasingly relevant even for small handyman businesses. If you store customer information digitally, accept credit cards, or manage client data through scheduling software, you face data breach risks. This coverage helps with notification costs, legal fees, and recovery expenses if customer information gets compromised.
What Affects Your Insurance Costs
Your insurance premium depends on your specific risk profile. The services you offer make a big difference—power washing and roof repairs cost more to insure than basic carpentry or drywall repair because they carry higher injury and damage risks. Where you work matters too. Operating in a state with higher construction costs and litigation rates means higher premiums.
Your annual revenue affects pricing as well. Higher sales volume typically means more jobs, more client interactions, and statistically more opportunities for claims. The number of employees on your payroll is another factor, particularly for workers' compensation coverage. A clean claims history helps keep costs down. If you've operated for years without filing claims, insurers view you as lower risk and often reward that with better rates.
Getting Started with Handyman Insurance
Start by checking your state's licensing requirements. Some states require specific insurance coverage to operate legally. California mandates licensing if any job exceeds $1,000 in labor and materials or requires a building permit. Arizona sets the threshold at $1,000. Most states don't have specific handyman licenses, but understanding your state's rules prevents expensive surprises.
Talk to your clients about their insurance requirements before you quote jobs. Many homeowners and property managers require proof of general liability insurance before allowing contractors on site. Having a certificate of insurance ready to share speeds up the process and signals professionalism. Some commercial clients also require higher coverage limits than the standard $1 million per occurrence.
When shopping for coverage, compare quotes from multiple insurers that specialize in contractor insurance. Some companies understand handyman businesses better than others and offer more competitive rates. Ask about available discounts for bundling policies, maintaining a claims-free record, or implementing safety programs. The cheapest policy isn't always the best value—make sure you understand what's covered, what's excluded, and how the claims process works before you buy.
The right insurance setup protects your business without draining your budget. For most handymen, that means starting with general liability coverage or a Business Owner's Policy, adding workers' compensation if you have employees, and considering professional liability as your business grows. Get quotes from specialized business insurers, understand exactly what you're buying, and keep your coverage updated as your business evolves. The few hundred dollars you spend each month on insurance beats the alternative: facing a lawsuit or major claim with nothing but your personal savings to fall back on.
